"Put Your Money Where Your Butt Is"

A friend of mine is trying to quit smoking. This will be his fourth time. After failed attempts with the patch, gum, and hypnosis, he is getting desperate for something that ‘works.’ He says that despite knowing how unhealthy smoking is for him, the fear of cancer, early death, premature aging, etc, just isn’t enough to scare him into quitting. As stupid as it sounds, he tells me, “I don’t have cancer right now, so holding off quitting one more day won’t matter.” It would seem that the disconnect between fulfilling his immediate desire (not quitting) and the possible outcome of this decision (dying of cancer) is too wide to impact his behavior.

His “plight” immediately came to mind when I came across this paper: Put your Money where your Butt is: A Commitment Contract for Smoking Cessation. Authors Xavier Gine (World Bank), Dean Karlan (Innovations for Poverty Action), and Jonathan Zinman (Innovations for Poverty Action) research the effectiveness of CARES (Committed Action to Reduce and End Smoking), a commitment product designed for people who want to quit smoking. In this study, research participants were offered the opportunity to open an interest-free savings account. The account required clients to make weekly deposits (of their own money) in the amount they would have otherwise spent on cigarettes. After six and again at 12 months, CARES clients underwent a urinalysis to test for recent nicotine consumption. CARES clients who passed the test received the balance of their deposits; those who failed (or did not take) the test forfeited the entire balance to charity.

The results were surprisingly positive, especially considering the bank account offered zero interest and there was a high likelihood of losing money. At six months, smokers randomly offered CARES were 3 to 6 percentage points more likely to pass than the control group, and CARES clients were 32 to 35 percentage points more likely to pass than the control group. The 12-month test revealed that smokers offered CARES were 4 to 6 percentage points more likely to pass the test than the control group, and CARES clients were 34 to 53 percentage points more likely to pass the test than the control group. The study also found that CARES treatment compares favorably to those found for nicotine replacement therapy in randomized controlled trials in other settings. The take-up rate was promising, as well: more than 1 in 10 of the people offered the treatment product signed up for the CARES program.

I’m not sure how this type of arrangement would work for my friend, but it does offer a provocative way to think about the potential of smoking cessation treatments.

The Washington Post Reviews Portfolios of the Poor

Carlos Lozada from the Washington Post reviewed Portfolios of the Poor today. The review describes Portfolios as a valuable departure from the rhetoric of global poverty.

"As the economists rumble, however, the poor get on with the messy business of living. On this, two new books chart a refreshingly distinct path. "Portfolios of the Poor and The Beautiful Tree avoid the big picture and zoon in on the basics of dialy poverty, exploring how poor families manage their money and educate their children. Their conclusions leave room for hope, based less on trust in big answers than on faith in human ingenuity."

Read the full review here:
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/19/AR2009061901547_pf.html

NPR Boston host interviews Portfolios of the Poor authors

This morning, Tom Ashbrook, the host of On Point (WBUR) spoke with researchers Stuart Rutherford and Daryl Collins and one of their survey participants, Lufefe, about what it really means to live on $2 a day. Lufefe, along with hundreds of others, participated in a year-long survey of the poor’s financial practices. Rutherford and Collins, along with Jonathan Morduch and Orlanda Ruthven, gathered meticulous financial diaries that demonstrate not only don’t the poor live hand-to-mouth, but they manage their money well enough to save for life’s big emergencies and celebrations. If you visit WBUR’s site, you can listen to the program and also view a series of photos taken in the Langa Township where Lufefe lives and where much of the research was conducted.

Collins and Rutherford’s research is available in Portfolios of the Poor. Visit the book’s web site here: http://www.portfoliosofthepoor.com/

Upcoming Microfinance Events in New York

Summer seems perpetually just around the corner. Solution? Escape the humidity and dreary evening thunderstorms at the following microfinance events. Bring your friends!

Monday, June 15
Kiva/ACCION bLENDer
7pm-10pm
Location: Clemente Soto Velez center, 107 Suffolk St (at Rivington)
Join Kiva and ACCION USA for an evening of entertainment and networking! The event will include live music, a silent auction, raffle prizes, and a food & drink cash bar. View the invitation here. A "blender" is an event in which two organizations come together to explore their common goal of raising awareness about microfinance and the impact of microloans on the lives of entrepreneurs.

Please RSVP to bLENDer2009invite@gmail.com

Thursday, June 18
Microfinance in Our Midst: A Path to Economic Independence in New York
6pm-8pm
Location: TBA
Presented by the Microfinance Club of New York (MFCNY) and Women Advancing Microfinance (WAM), this panel discussion brings together representatives of diverse financial institutions, ranging from small business loans (SeedCo Financial), community development credit unions (Brooklyn Cooperative Federal Credit Union), group lending programs (Grameen America), diversified lending and economic development organizations (The Business Center for New Americans), as well as the Empire State Development Corporation, which supports lending and asset building programs across the state.

This panel is packed with microfinance experts! Moderated by Daniel Delehanty, Vice President of Community Development Banking at Capital One Bank, panelists include: Edwin Hong, Senior Vice President, Seedco Financial; Leslie Kane, Vice President of Strategy and Finance, Grameen America; Jeffrey Metzler, Vice President of Economic Empowerment, Empire State Development Corporation; Samira Rajan, CEO, Brooklyn Cooperative Federal Credit Union; Yanki Tshering, Executive Director, Business Center for New Americans.

Panelists will outline the relative differences between the domestic and international microfinance sector. They will consider questions like:
-What is the profile and needs of the underserved community which they target?
-What services do they provide (both financial and non-financial) and what is their impact?
-What are the relative advantages and challenges of their business structure?
-How has the current economic crisis affected their business structure?
-Is their business sustainable?

Please RSVP to microfinance_event@yahoo.com. Please include your name, company name, and membership status.

Fee: MFCNY and WAM members-free; non-members-$10

EUROPEAN BOOK TOUR: Portfolios of the Poor

The office is quiet this week: FAI directors and staff are in Europe promoting the launch of Portfolios of the Poor: How the World's Poor Live on $2 a Day. Comprised of the financial “diaries” of over 250 families in Bangladesh, India, and South Africa, Portfolios of the Poor tracks the financial practices of the poor with unprecedented detail. Households maintained meticulous records for a year, reporting on their income, savings, expenses, and loans, every two weeks. This attention to detail revealed an unexpected lesson about poverty: the poor lead complex and active financial lives; not despite being poor, but because they are poor.

Published less than a month ago, Portfolios of the Poor has already received a considerable amount of press:

May 26

Noted Times columnist Nicholas Kristof reviews the book here:

May 18

Portfolios of the Poor is featured in the New York Times Idea of the Day, an editor-run blog dedicated to "highlighting the most interesting writing on the Web."

May 17

Portfolios of the Poor co-author, Daryl Collins, discusses the complex and sophisticated instruments with which the poor manage their unpredictable incomes in a Boston Globe article.

May 14

PRNewswire New York reviews Portfolios of the Poor.

May 14

The Economist magazine features Portfolios research and stories.

February 14

An early review from the Financial Times highlights lessons of Portfolios of the Poor.

Calling for FAI Student Network Bloggers!

Are you a graduate student with a summer internship or job in Microfinance?

If so, the Financial Access Initiative Student Network (FAI SN) wants to hear from you. Whether your microfinance position is in Mali or Manhattan, in implementation or evaluation, or with a local or multinational organization, we want to hear how you are contributing and gaining first-hand experience in the field.

We are looking for blog authors to chronicle their summer internship experiences on our blog, “The Microfinance Insider” http://microfinanceinsider.blogspot.com/). As an FAI SN blogger, you’ll be able to disseminate valuable knowledge and be recognized for your commitment. By joining this growing community of young people interested in microfinance, you will also have the opportunity to learn from the summer experiences of fellow bloggers.

Qualifications:

• Current graduate student (full or part-time)
• Commitment to microfinance
• Strong creative writing skills
• Previous freelance writing/blogging experience a plus

Tasks:

• Commitment to writing one substantive blog post (250 words or more) once a week for the duration of the internship
• Promotion of the blog to microfinance student groups and students at your university

Sample topics for your blog posts:

• How did you secure your summer internship?
• How do you feel you are making an impact?
• What challenges are you facing with your work?
• What sort of contacts are you making?
• How is your position preparing you for your post-graduation job?
• What skills would have better prepared you for your work?
• What do you think is missing from the microfinance conversation?

Becoming an FAI SN blogger is a great opportunity to:

• Explore issues in microfinance that interest YOU
• Receive feedback on your posts from blog followers
• Increase your organization’s exposure
• Start the conversation, not just be a part of it
• Address some of the misconceptions about microfinance
• Reflect solid writing skills on a resume

To apply
Please send a writing sample telling us why you decided to pursue an internship in microfinance. Do not send a traditional cover letter—if accepted, this will be your first blog post. Email your blog post and CV to fai.studentnetwork@financialaccess.org

Welcome Back!

It is that time of the year again, internships have ended and most of our summer bloggers are heading back to school.

There will be some changes happening at The Microfinance Insider. Some of our summer bloggers will continue writing and they will be joined by guest bloggers and other students. Notably, the FAI research assistants (all graduate students themselves!) will start blogging to share their thoughts on the industry and keep you up to date on current microfinance happenings and academic endeavors.

Of course, all the opinions expressed are those of the bloggers and do not reflect the views of the Financial Access Initiative – this is a blog by students that respects a diversity of ideas.

If you would like to become an author for The Microfinance Insider, email us at fai.studentnetwork@gmail.com with a note about your interest in MF and blogging, as well as a copy of your CV.

Happy reading,

Lara